Wednesday, October 13, 2010

I believe that banking institutions are more dangerous to our liberties than standing armies.-- Thomas Jefferson

The economy has been reeling from the massive problems caused by the Wall Street creation of securitized bonds – CDO’s and synthetic CDO’s, which fueled the housing boom. While these securitized mortgage bonds were being sold off across the world, the banks were busy buying credit default swaps to protect that phony bet. We are now seeing how this was engineered and how it is being addressed as the foreclosures come to market. Almost daily, fresh disclosures appear in the media.

The government handed out massive amounts of money, hundreds of billions of dollars, to support the perpetrators -- investment banks and insurers like Citibank, Bank of America, WaMu (JPMorgan Chase), Merrill Lynch and A.I.G., in order to protect the banking system. They paid back the T.A.R.P. money with near-zero percent loans that they used to invest but did not use to afford loans to the credit starved small businesses who were damaged by their excesses.

What is clear about all of this is that any finger pointing in this entire charade belongs entirely pointed in the direction of these corrupt institutions, which ran a casino at which unsuspecting borrowers were playing a rigged game. The house, the banks, fully supported by the government, always wins. Even the bond ratings agencies like Moody’s and Fitch were complicit in rating inferior investments as AAA+.

But, now full-fledged investigations by Attorneys General across the country, point to a picture that has long been suspected. Banks, in collusion with mortgage bankers and brokers, foisted a huge fraud upon the American people. Dangerous loans were practically forced upon borrowers and investors in the form of “liar loans” and free money to buy and speculate with -- and are culminating the fraud with doctored paperwork and illegal acts – starting with the banks themselves and moving on through the attorneys processing the foreclosures.

In New York, Eric Schneiderman, currently running for Attorney General, has promised to be the Sheriff of Wall Street. Should he win this Election Day, we have the promise of a full accounting of how Investment banks, mortgage brokers, foreclosure attorney mills and servicers who preyed upon homeowners – all worked together to perpetrate the biggest fraud in history.